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Wall Street's Friday Lunch Options

By Chris Tyler, Optionetics.com | Fri March 2, 2012 10:10AM PT


Zynga has a few option bulls saying, “Yelp!” as does the broader market in some "business as unusual" profit-taking. As of 12:00 ET the SP-500 (SPY) is off 0.37% despite one green apple still dangling temptation out to bulls.  

On the heels of Thursday’s 0.62% leap of faith into March and fresh closing highs for the SP-500, bulls are yelping over a slight pinch of long-awaited profit-taking after attempting to extend 13 and 21-week time cycles by a week—and snub our bean counting technical friend Fibonacci.

In those intertwined markets of influence, shares of Apple (AAPL) are still flaunting some Green Delicious appeal with its modest, but market-bucking gainer of 0.10%. Next week Apple is set to unveil its iPad3 to more than a bit of vocal pre-rollout fanfare and maybe some post celebration scrutiny as well.

The US Oil Fund (USO) is dashing the technical aspirations of Thursday’s 3-Day and “never-too-simple” pullback and subsequent breakout players seeking higher prices. Intraday, USO is off 2.40% and breaking below 10SMA support.

Inspired but proven-to-be faulty fears of supply disruptions out of Saudi Arabia following a false report of an Iranian attack, as well as continued strength in the US Dollar (UUP) appear to be Friday’s leading catalysts for re-pricing a market that’s always right.

With the Greenback tacking on 0.70%, dollar-denominated metals Comex Gold (GLD) and Silver (SLV) are being pressured slightly. Intraday, less precious declines of 0.25% and 1.80% in narrow consolidation trade is setting up testing of the 200SMA for support in both products.    

And the VIX ($VIX) is mostly unchanged near 17.50%. The fear index is just below its 10SMA but roughly 6% above last Friday’s stretchy and nearly complacent 16.50% reading. Overall, the action is mostly neutral on both shorter and longer-term time frames.

On the corporate side, local consumer review website Yelp! (YELP) is trading roughly 63% above its upwardly-revised IPO price of $15 with shares changing hands at 24.35 and yielding a market cap of about $1.4B. In an interview with CNBC, the CEO stated he has a “grand vision” for the company and wants to make it “the Amazon of local advertising and information.”

In sympathy for the well-received IPO and with Facebook’s debut not too far off, shares of Zynga (ZNGA) are up 4.50% but pulling back intraday from fresh all-time-highs after breaking out of a 20% wide, three-week flat base. In those sometimes accurate heat-seeking option markets, Zynga’s stock move is attracting the attention of bulls in its calls.

Intraday, Zynga call volume is favored over its puts by a 3-to-1 margin on spiking implied volatility and overall heavy trading of 50,000 contracts. Concentrated activity, for better or worse, given today’s less-than-unidirectional breakout, can be found in the ATM March and April 15 calls, as well as the 16 through 18 strikes; which now, slightly more out-of-the-money are likely to produce a "Yelp!" or two. Have a good weekend.

 

Chris Tyler
Senior Options Writer, former Market Maker & fulltime Option Hedge Hog Advocate
Optionetics.com ~ Your Options Education Site
Visit Chris Tyler’s Forum
 
The information offered here is based upon Christopher Tyler’s observations and strictly intended for educational purposes only, the use of which is the responsibility of the individual. 



Recent articles by Chris Tyler, Optionetics.com


September 21, 2012  -  Wall Street's Friday Lunch Options
September 21, 2012  -  Hot Shots: All Aboard or Train Wreck?
September 20, 2012  -  Wall Street's Thursday Lunch Options
September 19, 2012  -  The Expected Move: Bed Bath & Beyond Earnings
September 19, 2012  -  Wall Street's Wednesday Lunch Options


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